Thanks. I read your link and the link that was included in the link and come away with the conclusion that there is confusion. If I take what the IRS says literally instead of interpreting what they said, I would say that the first year postgraduate qualifies for AOTC because US Code 25A(2)(C) "The American Opportunity Tax Credit under subsection (a)(1) shall not be allowed for a taxable year with respect to the qualified tuition and related expenses of an eligible student if the student has completed (before the beginning of such taxable year) the first 4 years of postsecondary education at an eligible educational institution.” It says nothing in the actual code about a degree in terms of eligibility and in fact allows in an example, in the IRS explanations of the form, funds to be used in a graduate program if it is within the 4 years. So it is clearly tied to 4 years at an eligible educational institution. Everything else is conjecture unless supported by tax court rulings. I searched and did not find any tax court cases where the IRS challenged the use of AOTC for graduate school expenses when all eligibility requirements were met.
So I will apply the AOTC to the first year of expenses and LLC to the other years.
